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Campaign Finance: The Eccentric Billionaire Effect

Silicon Valley maestro Peter Thiel, Casino mogul Sheldon Adelson, Mutual fund tycoon Foster Friess: A few months ago, few but the most-connected political insiders knew of these men. But they are fast becoming household names, thanks to the extraordinary bets they’ve placed on long shot presidential prospects. Thiel, Adelson, and Friess are gambling on the quixotic campaigns of, respectively, Ron Paul, Newt Gingrich, and Rick Santorum. In backing these fringe contenders, they have helped prolong the drama in the spasmodic 2012 GOP primary at least into March.

In the process, the three gamblers are rewriting the rules for campaigning in the post-Citizens United era. It started in November, when Thiel contributed $900,000 to jump-start the Ron Paul-supporting Endorse Liberty Super PAC. Then, last month, Adelson funneled some $10 million to Gingrich’s Super PAC, Winning Our Future. And Friess gave $331,000 to Santorum’s PAC, Red White and Blue Fund.

These donations have arguably kept all three candidates afloat. None of the three has demonstrated fundraising chops, organizational skill, or general election appeal to match the establishment favorite, Mitt Romney. Each can easily remember his months as a presidential afterthought, polling in the single digits nationally and confined to the periphery of television debates.

But besides Romney’s perpetual front-runner status, not much has remained constant in this, one of the strangest presidential contests in memory. From 2011 through the first two months of 2012, Republican primary voters whisked through nearly a dozen potential candidates. The prize: a chance to claim the mantle of Romney’s rival for the GOP nomination. Now, after several rounds, the only contestants left playing are three of the least likely.

According to conventional wisdom, only a wild risk-taker would throw millions of dollars at Gingrich, Santorum, or Paul to fund a highly speculative campaign for president. And in fact, that description fits Thiel, Adelson, and Friess to a tee.

Take Santorum’s principal backer, Friess. He made his money as a mutual fund manager for the firm he founded, Friess Associates. His hobbies include crocodile hunting in Tanzania. Adelson, a staunch Zionist and a major philanthropist to Jewish causes, accumulated his massive wealth in the casino business. He is Chairman and CEO of the Las Vegas Sands Corp (LVS), which operates the mammoth Venetian in Las Vegas.

And in a field of eccentric risk-takers, Thiel is in a class by himself. Thiel co-founded the Internet startup PayPal in 1998. Four years later, he sold to eBay (EBAY) for 1.5 billion. In 2004, the entrepreneur loaned $500,000 to a Harvard dropout named Mark Zuckerberg. Today, Thiel’s stake in Facebook is worth more than $1 billion. Thiel’s extraordinary business success is matched only by his zany enthusiasm for moon-shot technological pursuits. The former PayPal CEO provided seed money to the Seasteading Institute, which seeks to establish libertarian utopias on deserted ocean islands. He supports efforts to build an artificial intelligence superior to humans. Realizing that he would never accomplish all of his goals in one lifetime, Thiel donated $3.5 million for research to “cure aging.”

By taking that appetite for risk to the political realm, Thiel, Adelson, and Friess are upsetting the conventional wisdom about the future of campaign finance.

Critics feared the Supreme Court’s Citizens United decision would prove a bonanza for shadowy interests backed by vast, anonymous wealth. While such anonymous donors are playing a major role in this year’s congressional elections, a second innovation has been less expected. It used to be that a presidential candidate would have to pull in thousands of small checks to compete. But now, individual patrons with an appetite for adventure can bankroll a major advertising operation for any minor candidate.

There have always been rich eccentrics, but Super PACs give them a new megaphone. According to one Republican strategist I spoke to, who asked not to be named to avoid offending donors: "Before you had an ability to give American crossroads a million bucks or 5 million, but you didn’t get any personal credit. Some of the people with that kind of money like to be invisible, but some want the world to know that they are playing an important role."

Another prominent Republican campaign staffer told me that Super PACs supporting a single candidate appeal to a unique different breed of donor. “First of all, not just any rich person can do it. To think you can self-fund a candidate, you have to be extraordinarily wealthy. And then, it helps to have certain visions of grandeur.” Thiel, Adelson and Friess certainly fit that bill. In all likelihood, these donors realize that their candidates stand a less than even chance of beating Romney. But if one of them manages to pull off an upset victory, they stand to gain enormous prestige in return for their investment. It remains to be seen whether one of them will hit the jackpot.

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